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Section 138: Presentation of cheque for encashment before bank a must

The Calcutta High Court in the case of M/s Merck Ltd. & Anr. vs. Radha Nath Nandi, held that the return of a cheque by the bank of the payee will not attract Section 138 of the Negotiable Instruments Act.
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The Calcutta High Court, in the case of M/s. Merck Ltd. & Anr. vs Radha Nath Nandi, held that the return of a cheque by the bank of the payee will not attract Section 138 of the Negotiable Instruments (“NI”) Act.

The issue came into existence after the bank returned the Cheque drawn in favor of the complainant with the remark  “account name & cheque name differs/no fund”. The complainant also submitted that there was some sort of secret agreement was in the process between the bank and his former employer and the former employer has not written his name on the cheque intentionally knowing what all he had to face as a result. He also contented that there is no deviation in the name of the payee and the account name maintained with the banker.

The petitioners claimed that Cheque was never presented for encashment before the bank.

The court by placing a reliance on Shri Ishar Alloy Steel Ltd. v. Jayaswals Neco Ltd. held that the condition for bringing up a pecuniary liability under Section 138 of the NI Act, cheque must be presented before the banker of the opposite party but in this case cheque was returned by making a remark altogether different to Section 138. In addition, the conclusion is also fortified by the fact that petitioner’s banker has issued a certificate stating he had sufficient amounts at all material points of time when the presentation of cheque was made.

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Reviewed by:
Simran Bhullar
Published on 07-Sep-17
962 views